New year with a creeping crisis

Czeslaw Ryszka

The government gently repented and admitted that for a long time it had not considered the fact of the economic crisis in the world and its influence on the Polish economy, including a decreasing income of the state budget. But the crisis was predicted by many specialists much earlier, already in the year 2007. Today the crisis has embraced the whole world, developed into recession and caused a slow tempo of economic growth. Naturally, the crisis has also affected Poland, which can be seen by the fact that banks have limited their loan offers. The government assumes that the revenues of the budget in 2009 will be 303.5 billion zloty and the expenses will be 321.7 billion zloty. The inflation is to be 2.9 %. Under the pressure of the present time the Ministry of Finance assumes a 3.7 % GDP growth in the budget, reducing it from 4.8%. But this level can occur inadequate to the economic situation. There are prognoses that the tempo of growth will be less than 1%. If it happened the revenues of the state would be not be reduced by 1.7 billion, as the government assumed, but by several billion zloty, especially that from 2009 we will use two tax rates: 18 and 32 %, consequently the state treasure will be reduced by 8 billion zloty. The budget deficit will not be more than 18 billion zloty. While working on the budget the government also proposed to create an expedient reserve, the so-called social solidarity reserve, in the amount of 1.14 billion zloty, within the framework of anti-crisis actions. This reserve will be financed by raising the rate of excise tax on alcohol and cars having engine capacity over 2000 cc. Minister Jacek Rostowski, speaking in the Senate, called the new budget ‘responsibility budget’, which would give insurance and stability to Poland and would warranty that there would be no ‘disturbances.’ But the opposition and other entities think that it is an anti-growth budget, which does not guarantee initiating any new investments and sustaining the economic situation. Furthermore, the assumed profits from privatisation – 12 billion zloty (this year just over 2 billion zloty) are unbelievable. In the situation of the drama seen in world stock exchanges it would be irresponsible to sell out state properties, especially that the government prepares a privatisation of the electro-energy sector. What are the weak points of this budget? According to Prof. Jerzy Zyzynski from the University of Warsaw the budget assumes too small deficit, i.e. it will be difficult for the government to react to disturbances of the economic situation by increasing the budget costs, which can lead to recession and economic slowdown like it was during the time of Leszek Balcerowicz who cooled down the Polish economy. The deficit should be increased in order to avoid recession and economic slowdown. Moreover, the assumption of the government based on the increase of people’s consumption should be considered as wrong since many companies are experiencing difficulties and they announced to lessen employment. Another thing is that those who lose their jobs abroad can return to Poland and increase the number of the unemployed who will buy less. The economy is being weakened, which is testified by the smaller inflow of direct international investments. In 2008 it could be up to 12 billion euros but in 2009 it will be reduced by ca. 10 billion euros (the direct international investments in 2007 amounted to almost 13 billion euros and in 2006 – 15 billion euros). The use of EU means should be surely concretised. This year only not more than 4% of the means out of over 17.5 billion euros, which are to finance national programmes, has been used. The question arises what the government should do not to repeat the situation next year. According to the experts the budget for 2009 is subordinated to keep the financial discipline forced by the European Commission and to introduce the common currency euro as soon as possible. The government forces euro, not noticing the negative effects of its introduction. I like the term used by the former minister of finance Zyta Gilowska that ‘the government is carefree like Little Red Riding Hood.’ The thing is that actually nobody knows how many toxic assets and what virtual sums are pushed in the balances of various institutions in the world. However, the absurd thing is that we use real money from our taxes to pay for the loss of virtual money. Someone has made a fortune twice. The former minister of finance proposes to lower prices and the VAT tax included in the prices in the situation of economic crisis. And it happens that in Poland there is a very high VAT rate, one of the highest rates in Europe. The minimal rate required by the EU directive is only 15 %. Law and Justice (PiS) planned to lower this rate by 3-4 %. Nowadays, when we face an approaching economic slowdown the decrease should be at least 4 %, i.e. from the present 22 % VAT to 18 %.
The propaganda balloon blown up by the coalition of Citizen’s Platform – Polish Peasants’ Party is going flat. Does it mean that the biggest hope of 2009 will remain only the project of the European Football Cup organised with Ukraine? It is true that instead of cutting taxes blindly, liquidating the shipyard industry, selling out power industry the government should follow the example of the Americans who found means to rescue their automobile industry. On the other hand, the example of Greece, not so distant from us, shows the consequences of ignoring the social dialogue. And what about other hopes? One should undertake more social activities and here I mean the example of the geothermal energy and the activities of the Radio Maryja environments that do their best to spread this national good, to build a community of faith and culture. The one who wants to succeed should initiate social actions because you cannot count on the successes resulting from the governmental activities.

"Niedziela" 1/2009

Editor: Tygodnik Katolicki "Niedziela", ul. 3 Maja 12, 42-200 Czestochowa, Polska
Editor-in-chief: Fr Jaroslaw Grabowski • E-mail: